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Comment by anders94 | Hacker News Reader

Hi, I'm Anders Brownworth, Chief Evangelist at Circle. I'm happy to answer any questions on USD Coin, CENTRE or Circle.

We're also hiring! See https://circle.careers/

Does Circle keep enough dollars on hand to buy back every USDC? Or do you run a fractional reserve? How much money is that total? What do you do if you have as many USDCs in circulation as you have dollars? Stop issuing them?

Circle holds one dollar for every dollar minted, we do not run a fractional reserve. The CENTRE Consortium holds minters (of which Circle is one) to strict auditing requirements. While this information is regularly published, you can see all minting and burning operations (as well as all transfers and other token operations) in realtime on the Ethereum blockchain. See etherscan: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb... There are always as many USDCs in circulation as there are fiat dollars backing them up in traditional bank accounts. The only way minters produce more in a 1 to 1 manner is if someone wires traditional dollars in. Likewise, Circle will burn USDCs in a 1 to 1 manner as requests for traditional fiat dollar withdrawals are processed.

Thanks for the quick answer, this all makes sense. Does this get limiting at all, in terms of wanting to mint new coins and not having the capital to do so?

That's like saying isn't it a bummer I cant just print money out of thin air to buy stuff. The whole point is to give people faith and trust in the stablecoin exactly because thie issuance process relies on locking up 1 USD.

It isn't limited like that.

As you can imagine, Circle maintains fairly sophisticated minting operations able to execute around the clock. All that is necessary for coins to be minted is for Circle to broadcast a properly signed transaction.

Now, of course, Circle can't just mint a limitless supply because we have a minting allowance set by CENTRE. While CENTRE itself can't mint coins, they do operate a minting allowance system with around the clock availability which can grant Circle a additional allowance per a ruleset to effectively manage risk.

This might seem to be getting into the weeds a bit but support for multiple minters (Circle and Coinbase here for example) is a significant differentiator between USDC and other reserve backed stablecoins.

It's worth noting that in the future, Circle may also invest these fiat funds in highly-liquid, AAA-rated fixed income securities. [0]

[0] https://support.usdc.circle.com/hc/en-us/articles/3600152783...

What has the SEC said about this endeavor?

Who are your custodian banks (how many)?

Who are your auditors?

Will you be holding exactly one USD for one token?

Will the backing be just USD sitting in a custodian account or do you plan to invest them?

How are you going to deal with the fact that your custodians will likely be doing fractional reserve themselves?

How will you guarantee fungibility of the token?

Circle works with a wide variety of regulatory agencies around the world. I'm not aware of anything the SEC has said publicly about USDC.

We work with a number of banking partners around the world but generally don't publicize this information.

Circle will begin publishing its USDC-related reports on centre.io after public launch. We have engaged Grant Thornton LLP to apply on a monthly basis certain agreed-upon procedures to assist management regarding the accuracy of USD reserve balances for the USD stablecoin tokens issued as set forth by the Company.

We will hold exactly one USD for one token. In the future, we may also invest these fiat funds in highly-liquid, AAA-rated fixed income securities.

The coins minted by both Circle and Coinbase are mutually fungible. You could acquire USDC from one and redeem it at the other. Support for multiple issuers is an important differentiator for USDC.

More information on this is available at https://support.usdc.circle.com/hc/en-us/articles/3600152783...

Why did you pick Ethereum instead of Ripple or Stellar? They have lower transaction fees and almost instant transfers in the seconds while their token contracts are way easier to setup and maintain if you are thinking on adding EUR, GBP, YEN, etc in the future. The only real advantage of Ethereum is their user base which is important but not the only decisive factor.

We considered a wide range of platforms before making a decision. At this point, however, Ethereum is really the only viable option particularly from a security and wallet support perspective. That said, we have been developing the technology in such a way that it can be adapted to other blockchains in the future should CENTRE choose to do that. However, while incredibly important, the contract implementation isn't nearly as much work as the legal, operational, risk and audit components necessary to connect the traditional financial system to cryptocurrencies in an open and compliant way. Should CENTRE choose to provide an implementation on another blockchain, much of those other components would simply apply with little modification.

Note I have no affiliation with Circle or Coinbase.

Ethereum tokens have far wider support among industry players and consumers, and a far larger set of compatible applications (e.g. state channel networks that allow near-free and instant ERC20 transactions, like Celer).

>>while their token contracts are way easier to setup

Setting up an ERC20 contract is literally a copy, paste, brand and broadcast job. In any case the technical cost of setup is not a factor that's relevant to large companies.

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